hckrnws

This feels like a classic business blunder. Focus hard on a single business segment, leaving an opening in the market for your competitors. Not because it wasn't profitable, but because it wasn't profitable enough for you, right now. Only downside is that now you've created an opening for a new player in the market.

This feels like a short coming of western business/stock market thinking. Focusing on profit within the next few quarters, and not caring about the longer term consequences. For all it's flaws and shady business practises at least China can think beyond a single fiscal year.

Ok but this is how the market is supposed to work. If the incumbents aren't doing what their customers want, then competitors can rise and fill the gap and compete.

This isn't a shortcoming, it's a competitive market working as intended.

The market doing what it's supposed to do does not negate that the market segment has only been left open because of overly myopic businesses.

Why would we think businesses will always make the right move?

They'll blunder. They'll do it even harder in the absence of competition.

The market is actively trying to solve it right now. Micron is investing $200B in new fabs. Everyone is trying to ramp up production.

Yes, identifying a problem is easy. But solving shortages in all cases requires perfect knowledge of future demand. So, good luck.

That's what modern capitalism is and it's bad for everyone

Everyone gets mad when Chinese do capitalism...

NO you see, we have to hate Chinese companies because they are unfair competitors since they get state funding from the Chinese government, unlike Intel, Micron, TSMC, ASML, Samsung who don't get state funding from the US, EU, Taiwan, ROK ... oh wait.

Scratch that, we have to hate Chinese companies because they do business with the Chinese military, unlike Intel, Nvidia, Samsung who don't do business with the US and ROK military ... oh wait.

"Why is nobody berating China?" is my favorite oft-repeated refrain on HN.

CXMT sells the vast majority of their bits at the prevailing market rate, just like everyone else. They are adding capacity as quickly as they can, with a 5-10 year planning horizon, just like everyone else. It’s really not that deep!

  > They are adding capacity as quickly as they can [...], just like everyone else

https://www.tomshardware.com/pc-components/dram/memory-maker...

PRC asked them to curtail DDR4 production so they didn't bottom out the market a year or two ago, and to focus on latest gen development, like HBM. They were the world leader in cost efficient DDR4 production at the time.

Yes of course their messaging to customers and the investment community is that they will be rational and measured in their investments. In reality, they are adding capacity as quickly as possible as margins are too high. However, capacity addition leading edge semiconductor manufacturing has a multi-year lead time.

It's not really a blunder though. Given that total capacity is tightly constrained, Samsung and SK Hynix are happy to focus on what they do at their best and with the highest margins. Why shouldn't they supply the HBM market?

There is really nothing about the stock market that means only thinking about the mext few quarters. See all the losses on the profit and loss statements of AI tech giants, or, say, game console companies? Why are their stocks still valued so highly during these periods? The answer: investors are thinking long term.

It is really impossible to have quality long term thinking without capitalization accounting and similar instruments that come out of the "wester" system of business that chinese free enterprise gladly and speedily copied when it was made free.

As a outside observer, NAND and DRAM prices have skyrocket ed with the AI infrastructure boom just as the China-based fabs are coming online.

It is wise for these Chinese fabs to eventually use a very aggressive dumping strategy to price well below cost push out other players forever, especially in DRAM.

But right now it seems they can max out their supply capacity without selling below cost.

Appears to me like China's endless state led (often unproductive) investment in semiconductor manufacturing subsidies (for decades) is about to pay off with some industry dominance soon.

Like the electric vehicle sector.

> It is wise for these Chinese fabs to eventually use a very aggressive dumping strategy to price well below cost push out other players forever, especially in DRAM.

Crucial's departure from the consumer market left such a gaping hole, that CXMT doesn't even need to push other players out to gain a footing.

How's it dumping below cost when hey can simply sell for 100% margins instead of western makers selling for 400%.

Because only western companies are allowed to make massive profits at the expense of entire nations, it's not greed when they do it apparently.

I personally fail to see the downside of any manufacturer selling forever at a loss, except for the manufacturer itself.

You become dependent on the supplier.

The downside in general is that other countries lose production capacity in steel, heavy industry, semiconductors, machine tools etc - industries that took decades to build and can't be easily replaced.

Also they gradually lose the ability to meaningfully innovate in those sectors because there's no grounding against production reality anymore.

This has geopolitical consequences further down the line.

> The downside in general is that other countries lose production capacity in steel, heavy industry, semiconductors, machine tools etc - industries that took decades to build and can't be easily replaced.

That's not really what happens though. You don't actually "lose" capacity, you just move to higher-valued special niches within the overall industry because (1) you can afford to, while low-cost competitors can't and (2) you can no longer expect to be the lowest-cost supplier for the bulk of the market. That's a win-win development and something to be encouraged.

> You don't actually "lose" capacity, you just move to higher-valued special niches within the overall industry

That's not what people mean by "lose" capacity.

Suppose DRAM companies expand capacity because prices are high, then demand levels off, the price crashes, and they all go out of business except for the one in China which gets a government bailout. That's fine, right? We're not interested in making DRAM, that's a fungible commodity, we want to make iPhones or something. (They make those too anymore, but never mind that.)

What happens now if China restricts what you can buy to give an advantage to their own companies who are trying to displace you in the higher-valued special niches? Or just raises the price for you and not them? What if there's a trade war? Or a conventional war?

When you still have a domestic industry, you go to them and have a source for the commodity. If only one country becomes the sole global supplier and that country isn't even particularly friendly, that's bad.

The domestic industry is still there, only instead of mass-market DRAM it has started making higher-valued varieties of the same stuff. If there's a trade war, they can easily reconvert to making the mass-market stuff, just at much higher cost. You can't expect more than that, since they never really were as big or as low-cost as the lowest cost suppliers can be in normal times. That's not "losing" capacity, it's just acknowledging that you can't create capacity out of thin air.

> If there's a trade war, they can easily reconvert to making the mass-market stuff, just at much higher cost.

"easily" is doing a lot of work in that sentence. Depending on the good and what they switch to making, this may neither be easy nor quick.

> steel, heavy industry, semiconductors, machine tools

the question is if single country can carry all these industries at loss for prolonged period of time.

Another approach is to rely on international supply chain and speed of innovation, we can't produce steel domestically profitably today, fine, we may buy it from diversified international supplier network, and rebuild it fast tomorrow if needed using new tech, and focus on many other high margin verticals, instead of putting many billions of resources into infra which could be obsolete tomorrow.

This is fine as long as the supply chain is, in fact, diversified.

sure, looks like more analysis is needed to check which verticals are diversified and which are not, instead of throwing blanket list of everything.

Agree, worth analysing what is genuinely commodity.

There are more elements to it though which can be sort of hard to explain.

There are whole cultures and ways of thinking built around production. The children of engineers who worked on xyz v1.0 have a genuine advantage when its time to work on xyz v2.0. There is a lot of tacit knowledge in these engineering fields and you have a huge advantage in knowledge retention if you can maintain unbroken chains of succession.

You can't achieve the top levels of ability (decades of experience, generational knowledge) if you are whip-sawing production to and fro across the globe every 10 years.

There are also cross pollination effects. Being in the same community with as many related fields as possible (co-located) is what drives cross-pollination and mobility of ideas and people between industries.

Think how many countries have tried to copy "silicon valley" and failed, and _why_ they failed.

What I'm saying is that technology is built by _people_ and there are human reasons why having local capacity is beneficial for all the related industries in the area.

> The children of engineers who worked on xyz v1.0 have a genuine advantage when its time to work on xyz v2.0.

my point is that other children with no extremely heavy investments into perl v1.0, will have some skills in c++ v1.0 and python v1.0, and will have advantage in adapting Tensorflow v1.0, which is more valuable than skills in perl v2.0. Heavily investing in one industry you sacrifice some flexibility.

So, this is multifactor analysis, lets say wise American people will elect me as next president, I would create list of industries, assign metrics (national security importance, potential revenue in 5y from now, impact on other industries, potential margin, risks of failure, etc), then build some formula which aggregate those metrics into single, and base on final metric allocate weighted funds to support N top industries.

the currency eventually collapses

I don't know if it's still a thing, but China was getting a lot of heat about a decade ago for purposefully devaluing their currency to make their exports more attractive.

They kind of had to do this, because their large amount of exports were pushing the value of it up compared to others.

It's funny that you call this an "very aggressive dumping strategy" while AI vendors are doing the same but with even greater losses and on a much larger scale.

It's all simply a fight for market share.

The original sin is the existing DRAM vendors selling their entire (spare) capacity to the likes of OpenAI.

No one sold their capacity to OpenAI. The vast majority of DRAM is transacted in what is essentially a quarterly auction.

"RAM is going to AI: OpenAI has secured up to 40% of the market."

https://globalcio.com/news/16062/

You're maybe talking about the spot market, but companies are free to make any sort of supply contract.

Chinese investment has not been unproductive. It gave them independence so that the US could not cut them of- see Cuba.

Is there a reason GPU's don't use insane "blocks" of sdcard slots (for massively parallel io) so the model weights don't need to pass through a limited PCI bus?

DDR4 going from $1.35 to $11.50 in a year shows this market was already distorted before CXMT showed up.

Legacy DRAM is still over half of Samsung and SK hynix's production capacity. That's where the volume pain actually lands while they're betting everything on HBM4.

This is just marketing. Why would you sell at 50% of market rate? Chinese production of NAND and DRAM is not significant, it's single digit %

It might be very effective marketing. The big non-Chinese OEMs trust and use Korean and Japanese DRAM, and they might have been unwilling to put DRAM from CXMT into their products. (CXMT is newish, does not have access to ASML gear, which ASML would like you to believe makes it harder to make high-quality DRAM, DRAM is historically not a very large fraction of the cost of most non-huge-memory machines, and a bad DIMM is an expensive mistake for a company like Dell or HPE that is on the hook for repairs.)

But now CXMT seems to have gotten at least Dell, HP (I wonder if the article meant HPE), Acer and Asus to buy and attempt to qualify samples. If CXMT lands some serious purchasing agreements while still selling well above cost, that’s a win for them.

Does the last part of your comment explain it? They need revenue to expand capacity and the market has opened up a window to become a bigger supplier while still being profitable.

Has DDR5 caught up to DDR4 latency yet? I remember it was worse at least in the beginning. There's more bandwidth per channel but a hw design can always add more channels for the desired BW. Not so for latency.

> add more channels

and unfortunately increase latency even more with registered DIMMs. Comparing bandwidth increase (50 GB/s) to the stagnated latency (~80..120 ns total, less than ~0.1 GB/s) over last decades, I'm wondering, whether one still can call today's RAM random memory (though sure it can be accessed randomly). Similar to hard disk drives. Up to 300 MB/s sequentially but only up to less than 1 MB/s 4KB random (read).

People have been wondering that for a while: https://news.ycombinator.com/item?id=19304281

Still no confirmation if CXMT or YMTC actually removed from entity list, until then this is jus cheap domestic inputs.

As far as I understand, the "entity list" you are referring to is part of the "Export Administration Regulations", so it restricts sales from the US to restricted entities, not the other way around.

More competition is always good

Awesome. Hopefully storage is next.

Great moment to break into the market if you're willing to forfeit profits

Good news. Now we need Chinese manufacturers of DDR4 chipsets and motherboards.

> Good news. Now we need Chinese manufacturers of DDR4 chipsets and motherboards.

Search aliexpress for X99 dual socket motherboards.

Chipsets don't determine the RAM type and all motherboards have been made in China for a while.

This is good news. The price you pay for jacking up your prices is losing market share.

Once established, the Chinese vendors will retain most the market share if the quality is ok. The SK/JP vendors are making a big mistake.

It's not clear that raising your prices to match the supply/demand curve is a mistake

They will compete on price if they are forced to, but they aren't forced to right now

Everyone is completely sold out and adding capacity as quickly as possible.

Are they really adding capacity?

Yes of course. Looking at the share prices of their suppliers— ASML, Lam Research, Applied Materials, etc.

But since when? There are public announcements about new energy deals since summer 2024. But I'm missing any information about similar RAM/NAND/HDD deals back then, so that corresponding shortages could be only for short time until, say, summer 2026.

I am sure you can lock great prices for ram for 2035 delivery.

If only on principle alone, could one secure a contract to buy a few TB of DDR5 memory to be delivered in 2035?

And if so, how?

Few TB probably not, but few EB I think you will be able to make a contract.

This decade is going to end with Chinese dominance in everything. Trump and AI handed them everything they need on a platter.

Western European countries got dominant, then got arrogant, letting the USA eat their lunch.

USA got dominant, got arrogant, letting China eat their lunch.

China is indeed getting dominant. They will get arrogant one day. Meanwhile, Western Europe and the USA are still very good places to live.